Gold trading basics · Lesson 44 of 54

Gold Account Performance: Separate Deposits from Trading Gains

Reconcile account equity with external cash flows and calculate a simple linked return example.

Separate Flows From Gain: instructional diagram for lesson 44 — CYGURU GOLD · Original lesson schematic. Examples are illustrative.

A larger balance is not automatically profit

An account can grow because trades earned money or because additional capital arrived. It can shrink after a profitable period if the owner withdraws funds. Keep deposits and withdrawals separate from trading P&L, fees and open-position valuation changes. A screenshot of the ending balance cannot establish performance without the starting value and the account’s intervening flows.

Reconcile the money first

Suppose starting equity is USD 10,000, deposits total USD 5,000, withdrawals are zero and ending equity is USD 15,600. Net economic gain is USD 600 under these assumptions. Dividing USD 5,600 by the original balance would incorrectly label the deposit as profit. This money reconciliation does not yet determine a unique percentage return because the timing of the added capital matters.

Calculate a simple linked return

Assume equity grows from USD 10,000 to USD 10,500, then a USD 5,000 deposit arrives immediately afterward. The next subperiod starts at USD 15,500 and ends at USD 15,600. The subperiod returns are 5% and approximately 0.6452%. Linking them gives 1.05 × (15,600 / 15,500) − 1, approximately 5.68%. The valuation immediately before the flow is essential to this simplified time-weighted example.

Choose the measurement for the question

Time-weighted measurement links subperiod returns to reduce the effect of external flow timing on the measure of investment performance. Money-weighted measurement reflects the size and timing of the investor’s cash flows and needs dated inputs. Different methods can give different valid answers to different questions. Avoid labeling a deposit-adjusted dollar gain as a time-weighted return or presenting one percentage without its method.

Practice task: build a cash-flow ledger

Create a small paper ledger with valuation timestamps, deposits, withdrawals, fees and ending equity. Reconcile the USD 600 gain in the example, then reproduce the linked return using the two subperiods. Explain why the same total deposit arriving at the start would change the return calculation. Preserve the method, missing valuations and assumptions alongside any public performance summary; a clean percentage should remain traceable to the ledger.

Gold Account Performance: Separate Deposits from Trading Gains

A larger balance is not automatically profit

Reconcile the money first

Calculate a simple linked return

Choose the measurement for the question

Practice task: build a cash-flow ledger

Can you apply the idea?

Make this lesson part of your process.

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